The Department for Business, Innovation and Skills (BIS) has this month published two draft regulations adding to the planned overhaul of consumer rights law recently kicked off with the draft Consumer Rights Bill, which was published in June (see our post on Bringing consumer law into the 21st Century – the UK's draft Consumer Rights Bill).
The two new draft regulations are the:
- Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 ("Consumer Contracts Regulations"); and
- Consumer Protection from Unfair Trading (Amendment) Regulations 2013 ("Consumer Protection Regulations").
BIS is seeking comments on both draft regulations, which can be made up until 11 October 2013.
The draft Consumer Contracts Regulations are intended to implement the Consumer Rights Directive (2011/83/EU). Some of the key provisions proposed in the regulations are:
- The draft regulations set out the information which a trader must give to a consumer before and after making a sale. The type of information is dependant on the type of contract being entered into i.e. whether it is an on-premises contract, off-premises contract, repair and maintenance contracts and distance contracts
- For distance contracts (such as internet based contracts) a list of the information that must be given to the consumer is set out at Schedule 2 of the draft regulations. This information includes the trader's identity, geographical address, contact details as well as all additional delivery charges or costs, the cost of using the means of distance communication for the conclusion of the contract and a reminder that the trader is under a legal duty to supply goods that conform to their specification in the contract
- The consumer is not liable to pay these additional charges and costs if the trader does not inform the consumer about them
- There are also specific requirements for when distance contracts are concluded by electronic means, particularly to make it clear where it is subject to payment obligations. If placing an order involves clicking on a button, this must be labelled in an easily legible manner with the wording "order with obligation pay" or a similar (unambiguous) phrase. If this is not complied with the consumer is not bound by the contract or order
- Confirmation must be provided within a reasonable time after conclusion of a distance contract, but in any event before delivery of the goods or before provision of any digital content begins
- The consumer may cancel a distance contract at any time in the cancellation period without giving a reason and without incurring costs unless enhanced delivery is chosen by the consumer, the value of goods is diminished by consumer handling, the goods are returned by the consumer or the service is provided at the consumer's request
- The cancellation period is extended from (the current period of) 7 days to 14 days after the day on which the contract is entered into. If the trader provides no information on the right to cancel, then the period is automatically extended to 12 months
- Online traders are able to withhold refunds until goods are returned and can reduce the amount of money refunded if the goods have been used
Hidden cost practices
- Traders need to obtain consumers' consent for all payments so that there are no hidden costs. Pre-ticked boxes that add on costs, such as an extended warranty for goods, will no longer be permitted
- Additionally the regulations state that consumers cannot be charged more than the cost of a basic rate phone call to call a customer helpline
As with current legislation these proposed new provisions are not intended to apply to contracts for the supply of certain types of goods and services eg banking services.
The key additional remedies the draft regulations look to introduce are:
- Consumers will have the right to "unwind" a contract and receive a full refund if "the goods have not been fully consumed". Digital content (e.g. web site downloads) has only been fully consumed if the digital content was available to the consumer for a fixed period and that period has expired
- The consumer will have the right to a discount where the consumer keeps the remainder of the goods (the level of which is set out the proposed regulations). This discount applies even if the right to unwind has been lost
- Consumers may also seek compensation where they can prove that the practice has caused economic loss, distress of inconvenience. If, however, the practice occurred as an accident, was beyond the trader's control or was due to reliance on a third party and the trader has taken reasonable precautions and due diligence, the consumer will not have this right to damages